l. f. e. goldie* equity and the international management

L. F. E. GOLDIE*

Equity and the InternationalManagement of TransboundaryResources

INTRODUCTION

Increasingly sophisticated human uses of natural resources and addi-tional discoveries of mineral deposits with biological and energy potentialmandate the creation of new management regimes for transboundaryresources. The problem of establishing managerial and distributional re-gimes agreeable to the states which are adjacent to such deposits andwhich lay individual claims to share in the common resources presentsimportant questions. In this article the question of how equitable principlesarising under international law can provide both guidelines and bench-marks for the draftsmen of treaties establishing regimes of sharing andfor policy makers involved in the apportionment of the resources will bediscussed. This article has a three-fold purpose. First, the article will seekto establish the importance of the relationship of instrumental equities toeconomic efficiency as guides in the construction, participation, and man-agement of regimes. Second, the value of replacing adversarial legalconfrontations with managerial regimes of coordination and of distributivejustice will be emphasized. These envisaged regimes are directed to thedevelopment of the regulated resource and are offered to improve therequisite techniques for more economical exploitation of the natural re-sources. Third, the article attempts to establish criteria for the equitabledistribution of the wealth in terms of the equities of proportionality.

The application of equity in international law as an indispensible rec-tifying factor in the process of decisionmaking, including negotiationwhich culminates in agreement,' will be considered in the first part of

this article. Equity will be discussed in terms of (1) the "General Prin-ciples of Law Recognized by Civilized Nations"; 2 (2) the "General Prin-ciples of Law" and the Ex Aequo et Bono clause of Article 38 of theStatute of the International Court of Justice (ICJ);3 (3) the sources of

*Professor of Law; Director, International Legal Studies Program, Syracuse University College

of Law.I. For a general discussion of equity in international law, see W. JENKS, THE PROSPECTS OF

INTERNATIONAL ADJUDICATION 316-427 (1964).2. Statute of International Court of Justice [hereinafter cited as ICJ Statute], Art. 38. See also

Goldie, Reconciling Values of Distributive Equity and Management Efficiency in the InternationalCommons, THE SETTLEMENT OF DISPUTES ON THE NEW NATURAL RESOURCES 335 (workshop sponsoredby Hague Academy of International Law and United Nations University, 1983).

3. Id., art. 38(2).

NATURAL RESOURCES JOURNAL

equitable principles applicable to the international negotiating and jur-idical processes; (4) the relation of international equity to internationallaw; and (5) the offering of a provisional definition for international equity.The theses developed will then be applied in subsequent sections on thenegotiation of regimes governing the use of shared resources lying underseabed areas common to two or more states. Alternative managerial re-gimes for the exploration and development of continental shelf resourceswill be discussed in light of the relevant doctrines of international equityand law which have emerged and are continuously emerging.

International law has long recognized the dual role of equity. Equitymay serve to mitigate the rigors of the law or, in Aristotle's classicstatement, to restore "the balance of justice when it has been tilted bythe law. 4 Equity, moreover, may act to make adjustments and allocationsoutside, or even contrary to, the law.5 This distinction is reflected in thegenerally accepted subsumption of principles and rules of equity of theICJ.6 When the principle of equity is invoked to bring about a decision"outside" or "contrary" to the law, the consent of the parties is required.Equity, in this case, can be considered analogous to conciliation or leg-islation and cannot assume the consent of the parties. To deny to theparties the right of giving or withholding their consent would be aninfraction of their sovereignty and their political independence.'

EQUITY IN INTERNATIONAL LAW

Equity and the "General Principles of Law Recognized by CivilizedNations"

Equity and general principles of law recognized by civilized nationsare sources of rules of decision by the ICJ and are authoritatively provided

4. ARISTOTLE, NICHOMACHEAN ETHIcs Book V, ch. 10 (J.K.K. Thomson trans. 1955). For asimilar statement with specific reference to international law, see HUDSON, INTERNATIONAL TRIBUNALS,

PAST AND FUTURE 103 (1944); the Diana (Masher Gardner) Case, 4 MOORE, INTERNATIONAL ADJUDI-

CATIONS 333, 342-43 (Modern Series) (1931).5. See ARISTOTLE, supra note 4; HUDSON, supra note 4; Diana case, supra note 4.6. ICJ Statute, Art. 38.1.c.7. I have sounded a previous warning against presuming that states' consent can be readily inferred

to exist when their rights may be diminished or the burden of their obligations increased:In the international arena, attempts to prescribe norms without appropriate notice, com-munication, interaction and sharing of values impose excessive stresses on the delicatemutual tolerances which exist at any given time to control the international community'sexpectations of acceptable or at least supportable behaviour. When the limits of thosemutual tolerances are transgressed, purported constitutive prescriptions fail to convinceor be credible. Furthermore, pressures to impose prescriptions without establishing theessentials of common goals and values, mutual consent and shared perspectives andpurposes, burden the international community and its law-evolving processes with stresseson its acceptability as a system of control and restraint. This bodes ill for the effectivefuture of other possibly more important developments.

Goldie, International "Constitutionality": State Sovereignty and the Problem of Consent in LEGALCHANGE: ESSAYS IN HONOR OF JULIUS STONE 316, 317 (Blackshield ed. 1983).

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TRANSBOUNDARY RESOURCE MANAGEMENT

in Article 38.1.c of the Court's Statute.8 The Statute's mission was ex-plained by de Vissche:

The drafters of the Court's Statute considered ["the general principlesof law recognized by civilized nations"] as a source of law inde-pendent of convention and custom, as belonging in virtue of theirsocial foundation and rational character to a common legal fund, butas having acquired through recognition inforo domestico by civilizednations that positive character that make them rules of law and ex-cludes what has been called the "ideal element" or mere aspiration,more or less widespread, to what is deemed a desirable organizationof law.9

Other general principles of law include res judicata, audi alterampartem,l° reliance," clean hands, good faith, proportionality, 2 and thedirection that a tribunal "look to the substance rather than to the form. "3

8. This is the formulation of aleana c of Art. 38, para. 1, of the ICJ Statute which provides:1. The Court, whose function is to decide in accordance with international law suchdisputes as are submitted to it, shall apply:

a. international conventions, whether general or particular, establishing rules ex-pressly recognized by the contesting states;

b. international custom, as evidence of a general practice accepted as law;c. the general principles of law recognized by civilized nations;d. subject to the provisions of Article 59, judicial decisions and the teachings of the

most highly qualified publicists of the various nations, as subsidiary means for thedetermination of rules of law.

The above formulation of aleana c. has been quite severely criticized. For example, Judge Ammounhas observed that the words "recognized by civilized nations" are inherently based on an assumptionof the inequality of the developing countries; he suggested that they be changed to "recognized innational legal systems." North Sea Continental Shelf Cases, 1969 I.C.J. 3, 132-36.

9. C. DEVISSCHER, THEORY AND REALITY IN PUBLIC INTERNATIONAL LAW 400 (rev. ed., Corbetttrns., 1968) citing 2 GENY, SCIENCE ET TECHNIQUE § 170.

10. See, e.g., The Nuclear Test Cases, 1974 I.C.J. 253, 265.11. For examples of "reliance" and the preclusion of an argument or testimony contradicting a

position held out to another and relied upon by that other, see the Status of Eastern Greenland Case,1933 P.C.I.J. Ser. A/B, No. 53 at 36-37 and 69-73; the ICJ's legal appraisal of declarations byPresident Pompidou and by the French Ministers of Defense and Foreign Affairs in an announcementin the JOURNAL OFFICIEL; The Nuclear Tests Case 1974 I.C.J. 253, 265-71. In the Nuclear TestsCase, the court said:

In announcing that the 1974 series of atmospheric tests would be the last, the FrenchGovernment conveyed to the world at large . . . its intention effectively to terminatethese tests. It was bound to assume that other States might take note of these statementsand rely on their being effective. The validity of these statements and their legalconsequences must be considered within the general framework of the security ofinternational intercourse, and the confidence and trust which are so essential in therelations among States. It is from the actual substance of these statements, and fromthe circumstances attending their making, that the legal implications of the unilateralact must be deduced. . . . [t]he Court holds that these statements constitute an un-dertaking possessing legal effect.

1974 I.C.J. 253, 269-70.12. See, e.g., North Sea Continental Shelf Cases, 1969 I.C.J. 3, 53, 54; Case Concerning the

Continental Shelf (Tunisia/Libyan Arab Jamahiriya), 1982 I.C.J. 18, 43-44, 75-76.13. See, e.g., The Cayuga Indians Arbitration (Great Britain v. United States), 20 AM. J. INT'L

L. 574 (1926); NIELSEN REP. 203, 307 (1926).

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The Roman law maxim, namely inadimplenti non est adimplendum (hewho fails to fulfill his part of an agreement cannot enforce that bargainagainst the other party), has also been received into international law. 4

These maxims or doctrines constitute bodies of principles and rules in adefinite concept and reflect basic social values.

Briefly, "general principles of law" arise through the following process.A developing specific articulation of justice involves claims that create ademand for its legal implementation. New rules and doctrines are thenforged either by the courts, legislatures, a combination of both, or byold legal theories gathered around a central idea of justice, thereby cre-ating modalities of that idea's reception into law. After those rules anddoctrines themselves become grouped around a central idea of justicethey become clarified in the process of claim, counterclaim, and accom-modation. The idea of justice both articulates the concept which governsthose principles and rules which form the doctrine and provides the de-terminant of their interrelated grouping, as in a constellation around thatcentral idea of justice. The reception and implementation of the centralidea of justice into rules and standards constitute part of the necessaryclarification process of society. The dispositive function of reception,however, is separate from the creative functions of emergence and clar-ification of legal principles. In both functions, creation and clarificationon the one hand, and reception on the other, legislation is an appropriatesource to identify the evolution of a "general principle of law recognizedby civilized nations." Judicial decisions and the "teachings of the mosthighly qualified publicists of the various nations" are also appropriatemechanisms to accommodate the evolution of "general principles of law." 5

The "General Principles of Law" and the "Ex Aequo et Bono" ClauseThe relation of equity to both positive international law and the ex

aequo et bono clause 6 of the Statute of the ICJ becomes an importantinquiry especially because the ICJ emphasized equitable factors so heavily

14. This maxim is reflected in Anglo-American equity, in the Rule in Cherry v. Boulthee, 4 My& Cr. 442, 41 Eng. Rep. 171 (ch. 1829) and its progeny. It was stated, for example, by Sargant J.in Re Peruvian Railway Construction Co., [1915] 2 Ch. 144, 150 (Ch. Div.), aff'd, 2 Ch. 442(C.A.) in the following terms: "When a person entitled to participate in a fund is also bound tomake a contribution in aid of that fund, he cannot be allowed to participate unless and until he hasfulfilled his duty to contribute."

The classical statement of this principle's incorporation into international law is, of course, thatof Judge Anzilotti in the Diversion of Water from the River Meuse Case, 1937 P.C.I.J. Ser. A/B,No. 7 at 50, where he said, of the principle inadimplenti non est adimplendum, that it is "[slo just,so equitable, so universally recognized, that it must be applied in international relations also."

See also, infra, notes 34 and 35 and accompanying text. See, further, Tacna-Arica Arbitration, 2R. Int'l. Arb. Awards 929, 943-44.

15. Art. 38.1.d, ICJ Statute.16. Art. 38, para. 2, ICJ Statute.

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in the North Sea Continental Shelf cases.' 7 Professor Bin Cheng 18 hasargued that the "equity" of the ex aequo et bono clause includes "pureequity ' 9 in all its forms and comprehends equity "not only secundumlegem, and praeter legem, but also, if necessary, contra legem." 20 Thefunction of equity under Article 38, paragraph .c, is to bring "latentrules of law to light"'" and is contrasted with the function of equity tocreate new rules under paragraph 2: "[M]embers of the Committee werein agreement that a judge should not legislate." 22

This position may be fruitfully compared with that of Judge Anzilotti, 3

who distinguished between two connotations of equity. He saw equity,first, as constituting part of "the general principles of international lawrecognized by civilized nations" and hence as falling within the scope ofArticle 38.1.c of the Court's Statute. Second, however, he considereddecisions rendered under the ex aequo et bono clause as more properlycharacterized not as equitable but as the result of compromise. 4

Perhaps a more descriptive term for the equitable principles assertedunder the ex aequo et bono clause is conciliation. Conciliation is a set-tlement on the basis of one party's claims which are not given and mayeven be denied under existing principles or rules of law and equity. Apossible situation where the states concerned empower the Court, byspecial agreement, to give a decision ex aequo et bono is described:

[Giving a decision ex aqeuo et bono;] would mean that the Courtwould have to decide according to non-legal principles of justice, ofmorality, of usefulness, of political prudence, and of common sense,which a municipal legislator or court would apply in a similar internaldispute, or which reasonable parties would adopt as their basis inconcluding a treaty. 5

The distinction between equity and conciliation, to which writers attest,has been generally accepted by courts and arbitral tribunals. Thus thetribunal in the Rann of Kutch Arbitration stated, in February 1966:

17. 1969 I.C.J. 3.18. BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND TR-

IBUNALS 19-20 (1953).19. Id. at 20. See also ROSENNE, THE INTERNATIONAL COURT OF JUSTICE 428 (2d printing 1961)

(discussing the Court's use of the Anglo-Norwegian Fisheries Case, 1951 I.C.J. 116, as a meansof developing equity "intra legem").

20. CHENG, supra note 18 at 20 n.85.21. Id. at 19.22. Id.23. Anzilotti, Dionisio, 1869-1950, Italian jurist, Professor at Palermo, Bologna, and (1911-37)

Rome; judge (1921-30) and president (1928-30). Permanent Court of International Justice. WEBSTER'S

NEW BIOGRAPHICAL DICTIONARY 43 (1983).24. D. ANzILOTrI, CORSO DI DIRrTrO INTERNAZIONALE 64 (1928). See also Habicht, Le Pouvoir

de Juge International de Statuer "Ex Aeuo el Bono," 49 ACADEMIE DE DROIT INT'L DE LA HAYE

RECUEIL DE COURS 281, 284-305 (1949).25. F. BERBER, RIVERS IN INTERNATIONAL LAW 266-67 (1959).

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As both Parties have pointed out, equity forms part of InternationalLaw; therefore, the Parties are free to present and develop their caseswith reliance on principles of equity. An international Tribunal willhave the wider power to adjudicate a case ex aequo et bono, andthus to go outside the bounds of law, only if such power has beenconferred on it by mutual agreement between the Parties. 6

The distinction between equity as a "general principle of law recog-nized by civilized nations" under Article 38.1.c of the Court's Statuteand the ex aequo et bono clause of Article 38.2 was aptly expressed:

The Court has not been expressly authorized by its Statute to applyequity as distinguished from law. . . .Article 38 of the Statute ex-pressly directs the application of "general principles of law recog-nized by civilized nations," and in more than one nation principlesof equity have an established place in the legal system. The Court'srecognition of equity as part of international law is in no way re-stricted by the special power conferred upon it "to decide a case exaequo et bono, if the parties agree thereto." [Citations omitted.] Itmust be concluded, therefore, that under Article 38 of the Statute,if not independently of that Article, the Court has some freedom toconsider principles of equity as part of the international law whichit must apply.27

This notion of equity as a general principle of law is contrasted with thevalues of ex aequo et bono in the process of decision:

[T]he legal concept of equity is a general principle directly applicableas law. Moreover, when applying positive international law, a courtmay choose among several possible interpretations of the law theone which appears, in light of the circumstances of the case, to beclosest to the requirements of justice. Application of equitable prin-ciples is to be distinguished from a decision ex aequo et bono ...The task of the Court in the present case is ...bound to applyequitable principles as part of international law, and to balance upthe various considerations which it regards as relevant in order toproduce an equitable result.2 8

26. India v. Pakistan, 7 I.L.M. 633 (1968).27. Hudson, J., in his separate concurring opinion in The Diversion of the Waters from the Meuse

Case. 1937 P.C.I.J. Ser. A/B, No. 70, at 76-77. See generally id. at 76- 79; JENKS, supra note Iat 32526. Arbitration of the "Norwegian Claims Against the United States of America" (Nor. v.U.S.), Hague Ct. Rep. (Scott) 39 (Perm. Ct. Arb. 1932) (1922). The Tribunal stated, in that case,that international lawyers generally understand words such as "the principles of law and equity" bywhich the parties had agreed to have their differences disposed of to indicate "the general principlesof justice as distinguished from any particular system of jurisprudence of the municipal law of anyState." HAGUE CT. REP. 2d (Scott) 39, 65 (Perm. Ct. Arb. 1932), 17 AM. J. INT'L L. 362, 384(1923).

28. Continental Shelf case (Tunisia/Libyan Arab Jamahiriya), 1982 I.C.J. at 18, 60. See also,English Channel Continental Shelf Arbitration, Court of Arbitration, The United Kingdom of GreatBritain and Northern Ireland and the French Republic, Decision of 30 June 1977 in which the Courtsaid "[F]rom the emphasis on 'equitable principles' in customary law that the force of the cardinal

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Finally, the method of determining the content of a specific equitableprinciple or rule and qualifying it as a "general principle of law recognizedby civilized nations" received an important clarification in Lord McNair'sseparate concurring opinion in the Status of South-West Africa case. Hesaid that "[T]he true view of the duty of international tribunals ...isto regard any features of terminology which are reminiscent of the rulesand institutions of private law as an indication of policy and principlesrather than as directly importing these rules and institutions."29

The Sources of Equitable Principles Applicable to the InternationalJuridical Process

Recourse to the general principles of law first requires abstraction fromthe particular, the technical, and the parochial municipal laws of a numberof states when these laws reflect a common underlying policy or value.The next process involves a synthesis of the common pervading principlesunderlying the disparate usages. The process is never a pure and simpletransfer of elements of municipal law into international law.3" A principleis first derived from common social necessities. It is then determined howoften these necessities recur internationally and call for application of thesame principle.31 Recourse to the general principles of law can be con-sidered a limited exercise in the policy of the law.32

Equity, however, does not permit a party to demand fulfillment of acontract which he himself is not ready to fulfill or which he has violated.33

Thus, for example, the Permanent Court of International Justice asserted:

[A] principle generally accepted in the jurisprudence of internationalarbitration, as well as by municipal courts, [is] that one Party cannotavail himself of the fact that the other has not fulfilled some obligation

principle of 'natural prolongation of territory' is not absolute, but may be subject to qualification inparticular situations." Id. at 168-69.

Writing in Aristotelean terms of "restoring the balance," the Arbitral Tribunal asserted that:The Court accepts the equitable considerations invoked by the United Kingdom as

carrying a certain weight; and, in its view, they invalidate the proposal of the FrenchRepublic restricting the Channel Islands to a six-mile enclave around the islands,consisting of a three-mile zone of continental shelf added to their three-mile zone ofterritorial sea. They do not, however, appear to the Court sufficient to justify thedisproportion or remove the inbalance in the delimitation of the continental shelf asbetween the United Kingdom and the French Republic which adoption of the UnitedKingdom's proposal would involve. The Court therefore concludes that the specificfeatures of the Channel Islands region call for an intermediate solution that effects amore appropriate and a more equitable balance between their respective claims andinterests of the Parties.

Id. at 173-74.29. 1950 I.C.J. 128, at 148.30. DE VISSCHER, supra note 9, at 400.31. Id.32. Id.33. Id. at 497 n.66. DE VISSCHER cites from Anzilotti's opinion as: Judgment of June 28, 1937,

Case of the Meuse Canals, P.C.I.J. Ser. A/B, No. 70 at 50, 77.

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or has not had recourse to some means of redress, if the former Partyhas, by some illegal act, prevented the latter from fulfilling theobligation in question, or from having recourse to the tribunal whichwould have been open to him.34

[I]t is a principle of international law, and even a general concep-tion of law, that any breach of an engagement involves an obligationto make reparation.35

Finally, the ICJ has articulated territorial state's peacetime responsi-bilities of vigilance and care: "[c]ertain general and well recognizedprinciples, namely: elementary considerations of humanity, even moreexacting in peace than in war; the principle of the freedom of maritimecommunications; and every State's obligation not to allow knowingly itsterritory to be used for acts contrary to the rights of other States." 36

Rules, principles, doctrines, or institutions are not examined for ex-ternal similarities, but for common underlying policies and values. Thisprocess of developing general principles of law fulfills several importantfunctions. First, the principles of law become the source of various rulesof law, not merely repetitive expressions of these principles.37 Second,juridical principles which interpret and apply the rules of law are devel-oped.38 Third, the principles of law can be applied directly to the factsof the case wherever there is no formulated rule governing the matter.39

In international law, where precisely formulated rules are few, this lastfunction of general principles of law acquires special significance andhas contributed greatly toward defining the legal relations between States. 4'The nature of these principles is not inherent in any particular system oflaw, but is common to them all. 4

The Relation of International Equity to International Law42

Unlike English equity which developed in the Court of Chancery andwields the weapon of the common injunction against those who soughtto enforce unconscionably obtained rights at common law, and unlike theRoman jus gentium which was the child of the Praeter Peregrinus, adifferent magistrate from the official who administered the law governing

34. Factory at Chorzow (Jurisdiction) Case, 1927 P.C.I.J. Ser. A, No. 9, at 31.35. 1928 P.C.I.J. Ser. A, No. 17, at 29.36. Corfu Channel Case, 1949 I.C.J. 4, at 22. In that case the Court said: "This indirect evidence

is admitted in all systems of law, and its use is recognized by international decisions." Id. at 18.37. CHENG, supra note 18, at 390.38. Id.39. Id.40. Id.41. Id.42. The term "international equity" is used to mean the equitable rules accepted under Article

38.1.c.

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the relations of Roman citizens (the Praetor Urbanus),3 equity in inter-national law is and always has been part and parcel of the law administeredby international courts and tribunals. Equity operates as an amelioratingand adjusting factor in the decisionmaking process of international law,without reference to an independent international jurisprudence or a sep-arate tribunal.

The sources of international equity are channelled through the creativeapplication of Article 38.1 .c of the ICJ's Statute which is a collection orcategory of general principles of law recognized by the community ofnations.' Given this provenance, international equity operates symbiot-ically with the two sources of law which precede it in Article 38, namely,treaty and custom. Equitable values which have generally emerged, how-ever, are available to temper the interpretation and application of treaties."Equity clearly can operate both secundum legem and praeter legem whenapplied to modify treaty effects. Whether equity can also operate contralegem, however, raises the issue of whether the Court seeks to amelioratethe impact of obsolete and poten'tially unjust positive law rules, or whetherthe Court is operating outside the scope of its permitted jurisdictionaltogether and is, therefore, transforming itself into a conciliation com-mission without the parties' consent.' This would, of course, be imper-missible. On the other hand, creativity in fashioning a case's rules ofdecision is not necessarily precluded.

A Provisional DefinitionContingently, international equity may be defined as the compendium

of concepts supporting, promoting, and implementing those entitlements,benefits, and satisfactions which are validated by society's contemporarysense of justice and fairness. In international law, these concepts reflectthe basic principles of jurisprudence and legislation which articulate andapply justice, reason, and values which are extensively diffused through-out the major legal systems of the world today. International equity, inthe sense used in this article, further operates to temper the rigors ofpositive international law's application to those specific situations wheregeneralizations would produce anomalies, inequities, or injustices, or, inAristotle's terms, "imbalances." 47

43. For a comparison of Roman and English equity in their formative years, see SIR. H. MAINE,ANCIENT LAW 48-78 (Sir. F. Pollock ed. 1906).

44. See, e.g., supra notes 27 and 29 and accompanying text. This was also the underlyingassumption of the ICJ's references to equity in the North Sea Continental Shelf Cases.

45. As illustrated in the classic case of The Diversion of the Waters of the Meuse, see supra note27 and accompanying text.

46. See supra, the distinction made in the text accompanying notes 17-30.47. ARISTOTLE, supra note 4.

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While international equity may operate secundum legem, praeter le-gem, intra legem48 and even, under special circumstances, contra legemby avoiding or excluding the application of an otherwise appropriate rulerather than judicially nullifying or overruling it, equity does not subjugatethe law.49 Secondly, international equity is not a separate jurisprudence.It still should be seen as acting as a reforming emollient and a "gloss"upon the rules and institutions of the traditional positive law.5" Interna-tional equity should also be seen as merging into international law, thusensuring its application in individual cases as well as its progressivedevelopment as a body of jurisprudence. The equitable concepts stressedby the ICJ in the North Sea Continental Shelf cases" effectively operatedboth as a gloss upon the law and as merging equity into international lawto ensure progressive development. The relevant equitable concepts whichdeveloped and gave new depth to the continental shelf doctrine generallyemphasized the claims of justice and utility and were not perceived asoverriding customary law. Equitable concepts, moreover, tempered therigors which would have resulted in the special circumstances of theNorth Sea's configuration had an alternative application of the continentalshelf doctrine been used.52 Finally, because international equity is still inits formative stages, it would be unjust to the ICJ to ignore the importanceof its pioneering efforts of reasoning in terms of specific wealth-creative,utilitarian equities in the North Sea Continental Shelf cases," the FisheriesJurisdiction cases,54 and the Continental Shelf (Tunisia/Libyan Arab Ja-mahiriya) case."

INTERNATIONAL EQUITIES AND INDIVIDUAL STATES' CLAIMS TONEW AVAILABLE NATURAL RESOURCES

The review which follows will stress that the principles of equity areincluded in the principles of positive international law. Secondly, prin-ciples involving abuse of rights, unjust enrichment, reliance, conscience,reciprocity, the fulfillment of obligations and expectations, and knowledgethrough notice lie at the heart of not only English equity, but also ofinternational and civil law equity. Lastly, then, principles of equity operatemutatis mutandis at the transnational and domestic, as well as the inter-national level.

48. For this interesting concept, see ROSENNE, supra note 19, at 428.49. JENKS, supra note 1, at 425.50. MAITLAND, EQurrY (2d rev. ed. 1936).51. 1969 I.C.J. 3.52. 1969 I.C.J. 3, at 52. See also at 50.53. 1969 I.C.J. 3.54. Fisheries Jurisdiction Case (United Kingdom of Great Britain and Northern Ireland v. Iceland),

1974 I.C.J. 3. See also Fisheries Jurisdiction Case (Federal Republic of Germany v. Iceland), 1974I.C.J. 175, at 196.

55. 1982 I.C.J. 18.

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A Preliminary Explanation and an ExampleThe equitable principles adumbrated in the following paragraphs refer

to the notion of equity as instrumental in wealth-creation6 The originof instrumental equities, accordingly, is from numerous sources: inter-national and domestic case law, domestic legislation, and the internationaland domestic law of treaties.

To take an example from a field quite distinct from that under review,at the 1979 World Administrative Radio Conference, the InternationalTelecommunications Union (ITU) passed a resolution calling a conferenceto be held in 1985 for the purpose of finding an agreed formula, or atleast an approach, to guarantee "for all countries, equitable access to thegeostationary satellite orbit and space service frequencies." 57 The con-ference may provide a satellite service-type plan for satellite communi-cations and revise existing conflict resolution procedures. Indeed, expertsin the field perceive a possible conflict of values: those reflected in the"rationing approach" '5 8 and those espousing the "engineering ap-proach." 59 The present counterpoint of claims arises from recent devel-opments in international law governing the distribution of access to thesimultaneous exploitation of both the geostationary orbit and the electro-magnetic spectrum. Critics of the present system with its protection ofexisting ("grandfather") rights tend to underscore dissatisfaction withexisting norms in the context of both conflict resolution procedures andthe legal norms governing access to geostationary orbital positions.' Onthe other hand, a country-by-country allocation approach is criticized asleading to wasteful use or non-use of at least some of the availablesegments of the geostationary orbit.6 The dilemma is that the currentsystem is efficient, and maximizes the useful employment of equatorialorbital positions needed for geostationary satellites. It is, on the otherhand, regarded as inequitable since there appears to be little deference,if any, to claims of distributive justice. Discussion of this dilemma willbe deferred to a later analysis of how the instrumental equities of wealthcreation are to be fruitfully managed in a context which can achieve a

56. Discussion of the relationship between distributive justice and equity will be reserved forlater paragraphs.

57. Resolution No. 3, Relating to the use of the GeostationarySatellite Orbit and to the Planningof Space Services Utilizing It, in INTERNATINAL TELECOMMUNICATIONS UNION, FINAL ACTS OF THE

WORLD ADINmISTRATivE RADIO CONFERENCE, GENEVA, 1979, 744-45 (1980).58. See, e.g., Rothblatt, Satellite Communication and Spectrum Allocation, 76 AM. J. Ir'L L.

56, 67-70, 73 (1982). See also D. Smith, Conflict Resolution in Outer Space: International Lawand Policy 13-14 (1982) (unpublished paper presented at the Hague Academy of International LawWorkshop on the Resolution of Disputes over New Natural Resources, November 8-10, 1982).

59. Rothblatt, supra note 58, at 67-70.60. Rothblatt, id. at 67-73; see also Goldie, supra note 2, at 347-48.61. Rothblatt, id. Goldie, id.

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minimal level of distributive justice, or at least reduce tensions whichcould otherwise arise from perceived senses of injustice.62

Abuse of Rights (and Unjust Enrichment Arising Therefrom)In the Fisheries Jurisdiction cases,63 the ICJ clearly enunciated the

policy of international law regarding the perceived inequities of misusingrights. The Court refused to recognize the transformation of a right,validly asserted to vindicate one purpose, to achieve a different purposewhich would deny another state's valid and subsisting rights. 4 The Courtfurther disallowed the abuse of preferential fishing rights to exclude theestablished fishing rights of other states by referring to equity: "[I]n orderto reach an equitable solution of the present dispute it is necessary thatthe preferential fishing rights of Iceland, as a State specially dependenton coastal fisheries, be reconciled with the traditional fishing rights ofthe Applicant." 65

In addition to the equities of unjust enrichment prominent in the judg-ment, values stemming from reliance and variously called "laches," "treuund glauben" (trust and confidence), or confiance (as an aspect of "pre-clusion") also played an important role in evaluating the historic rightsto the Icelandic Fishery of the English and German fishing communitieswhose traditional and historic claims the Court so unequivocally vindi-cated. Similarly, arbitration tribunals have not allowed unjust enrichmentwhich might arise from a refusal to fulfill an obligation, or from redef-inition of a right which changes the basis of the obligation. 6

62. See infra section entitled Possible Alternative Regimes.63. Fisheries Jurisdiction Case (United Kingdom of Great Britain and Northern Ireland v. Iceland),

1974 I.C.J. 3, at 27-28. See also Fisheries Jurisdiction Case (Federal Republic of Germany v.Iceland), 1974 I.C.J. 175, at 196.

64. The Court said:The concept of preferential rights is not compatible with the exclusion of all fishingactivities of other States. A coastal State entitled a preferential right is not free,unilaterally and according to its one uncontrolled discretion, to determine the extentof those rights. The characterization of the coastal State's rights as preferential impliesa certain priority, but cannot imply the extinction of the concurrent rights of otherStates, and particularly of a State which, like the Applicant, has for many years beenengaged in fishing in the waters in question, such fishing activity being important tothe economy of the country concerned. The coastal State has to take into account andpay regard to the position of such other States, particularly when they have establishedan economic dependence on the same fishing grounds. Accordingly, the fact that Icelandis entitled to claim preferential rights does not suffice to justify its claim unilaterallyto exclude the Applicant's fishing vessels from all fishing activity in the waters beyondthe limits agreed to in the 1961 Exchange of Notes.

65. Fisheries Jurisdiction Case (United Kingdom of Great Britain and Northern Ireland v. Iceland),1974 I.C.J. 3, at 30.

66. The Lena Goldfields Arbitration (Lena Goldfields v. Russia), [1929-30] ANN. Di. 3 (CaseNo. 1, 1930); United Dredging Company Case (United States v. Mexico) 4 R. INT'L ARB. AWARDS263 (General Claims Commission 1927); Union Land Company Case, 4 MOORE, ADJUDICATIONS,supra note 4, at 3434, 3452-53 (1839). See also JENKS, supra note 1, at 417. But cf. Dickson Car

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Reliance and Notice as EquitiesConduct stemming from perception or knowledge of a situation turns

on the mode of information whereby that knowledge was imparted orthat perception received. When that knowledge or perception has beenimparted to the actor through the words or conduct of another, that otheris responsible towards the actor, at least to the extent that the informationshould not have been fraudulently or negligently imparted. Thereafterthat other party should not be permitted unilaterally to change the actor'sposition, or the posture of the factual situation regarding which the knowl-edge was imparted. To change the situation unilaterally, either in wholeor in part, or to give misleading, partial or incomplete information, is toact inequitably whenever the actor has, in reliance and good faith, alteredhis position on the assumption of the truth of what he was led to understandor believe. The faith of the actor has its counterpart in the need forconscience, and for conscionable conduct, on the part of the other party.67

Alternatively, the knowledge which may be attributed to an actor indetermining, or appraising, his rights is neither more nor less than theknowledge imparted. The actor is entitled to rely on the information ofwhich he has been made aware and cannot be held to know of otherinformation or facts. Nor can his rights be circumscribed by virtue of theexistence of facts or events of which he was not apprised. A reasonableinquiry, however, following imparted or notified information might revealfurther data. If conscionable conduct were to call for such further rea-sonable inquiry then, clearly, the actor should be held responsible forfailure to meet that standard. The equities of such imputed notice on thebasis of imparted knowledge are clear and can only be invoked when theactor's failure to inquire was itself inequitable and when the informationwould have been available upon diligent inquiry.

The Equities of Estoppel and LachesThe concepts of equitable estoppel and laches emerge from the same

fundamental ideas of reliance, confidence, the duty to give notice, andthe attribution of knowledge in the one to whom notice is given. Equitableestoppel in Anglo-American equity has been defined as follows: "A partyis prevented by his own acts from claiming a right to the detriment of

Wheel Company Case (United States v. Mexico), 4 R. INT'L ARB. AWARDS 669, at 676 (GeneralClaims Commission, 1931).

67. In domestic and transnational commercial law this is known as the doctrine of notice. Inpublic international law, reliance and notice are reflected in the transnational commercial arbitrationsof the Lena Goldfields Arbitration, [19291 ANN. DIG. 3 (Case No. 1, 1930), and the CaliforniaAsiatic Oil Company and the Texaco Overseas Petroleum Company v. the Libyan Arab Republic,53 INT'L L. REP. 389 (1979), I.L.M. (Dupuy, Sole Arbitrator, 1977). Notice and reliance are foundin international tribunal decisions. See International Court of Justice in the South-West Africa Ad-visory Opinions, 1950 I.C.J. 128; 1962 I.C.J. 319.

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another party who was entitled to rely on such conduct and has actedaccordingly ... ""

Estoppel in international law was similarly defined by the PermanentCourt of International Justice, in the Chorzow Factory case. 6 An exten-sion of the principle of estoppel is that a state's intention to be bound byits unilateral acts is to be determined by the interpretation of the act.7°

Moreover, when a state makes a statement limiting its freedom of action,that statement is to be restrictively interpreted. 7' Such statements requireno essential form and "[w]hether a statement is made orally or in writingmakes no essential difference . "...,,72 The binding character of an in-ternational obligation assumed by unilateral declaration is based on goodfaith. 73 "Thus interested States may take cognizance of unilateral dec-larations and place confidence in them, and are entitled to require thatthe obligation thus created be respected. ,74 Public statements made by aState's governmental officials may also create an obligation on the partof that State. The precise nature and limits of the obligation "must beunderstood in accordance with the actual terms in which they have beenpublicly expressed." 75

68. Estoppel is a bar or impediment which precludes allegation or denial of a certain stateof facts in consequence of previous allegation, or denial or conduct or admission oradjudication of the matter in a court of law. It operates to put party entitled to itsbenefit in same position as if the thing represented were true.

BLACK's LAW DIcrIONARY 494 (5th ed. 1979).69.

[O]ne Party cannot avail himself of the fact that the other has not fulfilled someobligation, or has not had recourse to some means of redress, if the former Party has,by some illegal act, prevented the latter from fulfilling the obligation in question, orfrom having recourse to the tribunal which would have been open to him.

1927 P.C.I.J. Series A, No. 9, at 31. See also Danzig Railway Officials, Avisory Opinion, 1928Ps-I 2.C.I.J. Series B, No. 15, at 27; Jurisdiction of the European Commission of the Danube, AdvisoryOpinion, 1927 P.C.I.J. Series B, No. 14, at 23; and the Societe Commerciale de Belgique Case,1939 P.C.I.J. Series A/B, No. 78, at 176. See also Diversion of the River Meuse Case, 1937 P.C.I.J.Ser. A/B No. 70, at 25, where the Permanent Court applied the principle "allegans contraria nonaudiendus est"; and the Nuclear Test Case, 1974 I.C.J. 253, 267-72 (Opinion of the Court), 285(separate opinion of Judge Gros). See also id. at 314 (separate Opinion of Judge Petren).

70. 1974 I.C.J. 253 at 267-68. See also the Temple at Preah Viher Case, 1961 I.C.J. 3 at 311,quoted in the Nuclear Tests Case, 1974 I.C.J. 253 at 268. In the Nuclear Tests Case the Court added:"One of the basic principles governing the creation and performance of legal obligations, whatevertheir source, is the principle of good faith. Trust and confidence are inherent in international co-operation, in particular in an age when this co-operation in many fields is becoming increasinglyessential."

71. 1974 I.C.J. 253 at 267-68.72. Id.73. Id. at 268.74. Id.75. Id. at 270. Statements were made, respectively, on 25 July 1974 by the President of the

French Republic; on 16 August and 11 October 1974 by that country's Minister of Defense; and on25 September 1974, in the General Assembly of the United Nations by its Minister for ForeignAffairs. See ICJ's legal appraisal, supra note 11.

The ICJ's predecessor, the Permanent Court of International Justice, said, with regard to a jur-idically rather similar unilateral statement:

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In the International Status of South-West Africa case,76 the ICJ foundthat certain declarations made by the Government of the Union of SouthAfrica (now the Republic of South Africa) constituted a recognition onits part of an obligation to submit to continued supervision in accordancewith the Mandate. The Court added: "Interpretations placed upon legalinstruments by the parties to them, though not conclusive as to theirmeaning, have considerable probative value when they contain recog-nition by a party of its own obligations under an instrument."" In sum,international law and transnational commercial law, like Anglo-Americanequity, impose an obligation upon a state whose words or conduct haveled others to rely upon it and alter their position in that reliance, to bethereupon bound by its own acts.

The underlying moral values of good faith and reliance also form thefoundation of the doctrine of laches. The concept of laches is "basedupon a maxim that equity aids the vigilant and not those who slumberon their rights." 78 Laches is defined as neglect to assert a right or claimwhich, taken together with lapse of time and other circumstances, causesprejudice to the adverse party, and operates as a bar in a court of equity.79

The principle of "extinctive prescription," that is, the barring of claimsin international law through the lapse of time, "has been applied byarbitration tribunals in a number of cases." 8 The justification of thisinternational law concept, furthermore, is rooted in equitable premises,as stated by Sir Hersch Lauterpacht. "Delay in the prosecution of a claimonce notified to the defendant State is not so likely to prove fatal to thesuccess of the claim as delay in its original notification, as one of themain justifications of the principle is to avoid the embarassment of thedefendant by reason of his inability to obtain evidence in regard to a

What Denmark desired to obtain from Norway was that the latter should do nothingto obstruct Danish plans in regard to Greenland. The declaration which the Ministerfor Foreign Affairs gave on July 22, 1919, on behalf of the Norwegian Government,was definitely affirmative: "I told the Danish Minister today that the Norwegian Gov-ernment would not make any difficulty in the settlement of this question."

The Court considers it beyond all dispute that a reply of this nature given by theMinister for Foreign Affairs on behalf of his Government in response to a request bythe diplomatic representative of a foreign Power, in regard to a question falling withinhis province, is binding upon the country to which the Minister belongs.

1933 P.C.I.J. Ser. A/B No. 53, at 71. The Court characterized the "Ihlen Declaration" as "uncon-ditional and definitive." Id. at 72.

76. 1950 I.C.J. 128.77. Id. at 135-36. For similar points of view in both the Permanent Court and the present Court

to that quoted in the text, see Advisory Opinion Concerning the Competency of the InternationalLabour Organization, 1922 P.C.I.J. Series B, No. 2, at 41; Advisory Opinion on the Competenceof the General Assembly Regarding Admission to the United Nations, 1950 I.C.J. 9; and the caseconcerning the Rights of Nationals of the United States in Morocco, 1952 I.C.J. 176 at 200.

78. BLACK's LAW DICTIONARY 787 (5th ed. 1979).79. Id.80. 1 LAUTERPACHT, OPPENHEIM'S INTERNATIONAL LAW (PEACE) 349-50 (8th ed. 1955). For a list

of cases exemplifying the proposition in the text, see id.

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claim of which he only became aware when it was already stale.""' Theunderlying policy (namely that of reliance) of extinctive prescription ininternational law "resembles the laches, or acquiescence, of EnglishEquity rather than the statutory limits governing Common Law claims, "82

in that a fixed period of time is not required, but an alternation of position,a detrimental reliance, is.

In other terms, consider A who possesses a right unknown, at least inits relevant particulars, to B. B then, because of A's inaction, alters his(B's) position by the investment of time, effort, money, and technologicalskills, in pursuing what he (B) considers to be his (B's) right. A is thensaid to have at least permitted B to believe that A would acquiesce inand accept B's activity and investment. Accordingly, A cannot later arguethat B's good faith efforts were invalid to create a right enuring to B onaccount of A's pre-existing right. Should A have wished to preclude B'sactivity from ripening into a vested entitlement, A should have giventimely notice to B of his (A's) intention to activate his pre-existing right.Here again the basic values of equity involving reliance, notice, and goodfaith create the applicable principle. A far different outcome, of course,results when B invades A's right with knowledge thereof and merelyanticipates inaction by A. In such a case, equity recognizes A's right toassert claim both to his original entitlement and to B's improvementsthereof.83 In addition to vindicating conscionable behavior and reprobatingunconscionable conduct, the equities of reliance and good faith constituteinstruments for creating the environment of stability and predictabilitynecessary for wealth creation.

Proportionality as an EquityThe concept of proportionality as an equitable principle was articulated

by the ICJ in the North Sea Continental Shelf cases." The states were

81. Id.82. Id. at 349 n.4.83. The old English case of Ramsden v. Dyson, [1866] L.R. I H.L. 129, illustrates this point

with the following propositions:(a) If a stranger begins to build on land supposing it to be his own, and the real

owner, perceiving his mistake, abstains from setting him right, and leaves him topersevere in his error, equity will not afterwards allow the real owner to assert his titleto the land; and

(b) But if a stranger builds on land knowing it to be the property of another, equitywill not prevent the real owner from afterwards claiming the land, with the benefit ofall the expenditures upon it.

ld.. For an equivalent theory in international law, see LAUTERPACHT, PRIVATE LAW SOURCES AND

ANALOGIES OF INTERNATIONAL LAW §§ 87-89 (1927), and the cases, state practice and agreementsthere cited. See also the Certain German Interests in Polish Upper Silesia Case, 1925 P.C.I.J. SeriesA, No. 6, at 19.

84. 1969 I.C.J. 3. See also id. at 54.

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called upon to recognize a reasonable degree of proportionality to deter-mine "the extent of the continental shelf appertaining to the States con-cerned and the lengths of their respective coastlines. 8 5 Proportionalityis distinguishable from the argument that each state should "receive ajust and equitable share" of the divisible area.86 The ICJ rejected thisargument because it was based on a premise of distributive justice whichwould control the partitioning of an area held in common or undividedshares. The Court saw the continental shelf of each North Sea state asalready appurtenant to that state and only the problem of demarcation ofthe boundaries remained. The Federal Republic of Germany argued forthe distribution of a common property in terms of equitable shares, whereasthe ICJ held its function was the determination of the boundaries betweenthe separate and individually controlled areas which constituted the severalcoastal states' appurtenant continental shelves. In these circumstances,the Court saw equity as having an important role in the delimitation ofboundaries. Equity was not to provide the criteria of "fair shares" orequality in the sense of parity or of levelling but, rather, to correctanomalies.87 Thus the Court said:

Equity does not necesesarily imply equality. There can never be aquestion of completely refashioning nature, and equity does not re-quire that a State without access to the sea should be allotted an areaof continental shelf, any more than there could be a question ofrendering the situation of a State with an extensive coastline similarto that of a State with a restricted coastline. Equality is to be reckoned

85. 1969 I.C.J. 3, 52.86. Note that Germany contended that

[A]n equitable apportionment of the continental shelf of the North Sea among thesurrounding States could not be achieved by determining the boundary lines betweeneach pair of adjacent or opposite States as an isolated act. The boundary problem mustrather be considered as a joint concern of all North Sea States, taking into accountthe effect of each boundary on the apportionment as a whole.

Reply of Federal Republic of Germany, 1 North Sea Continental Shelf Cases, I.C.J. Pleadings 389,423 (1968). See also 1 Pleadings at 76. Be that as it may, the Federal Republic's view of distributivejustice and equity was encapsulated in th following thesis:

(I) In apportioning the continental shelf among coastal States, the breadth of theircoastal frontage facing the North Sea should be the principal criterion for evaluatingwhether the area allocated to one of these States is a just and equitable share.

(II) The most equitable apportionment of the continental shelf among the coastalStates would be a sectoral division based on the breadth of their coastal frontage facingthe North Sea.

(III) As to the delimitation of the continental shelf between the Parties, the equi-distance method cannot find application, since it would not apportion a just andequitable share to the Federal Republic of Germany.

(IV) The boundary line dividing the continental shelf between the Parties must besettled by agreement in accordance with the judgment of the Court.

1 Pleadings at 89.87. On the history of equity as the "correction of anomalies," see MAINE, supra note 44, at 62-

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within the same plane, and it is not such natural inequalities as thesethat equity could remedy.8

The ICJ reviewed equity and proportionality as providing criteria todetermine the location of boundaries rather than functioning as simpledistributive justice.

A final factor to be taken account of is the element of a reasonabledegree of proportionality which a delimitation effected according toequitable principles ought to bring about between the extent of thecontinental shelf appertaining to the States concerned and the lengthsof their respective coastlines,-these being measured according totheir general direction in order to establish the necessary balancebetween States with straight, and those with markedly concave orconvex coasts, or to reduce very irregular coastlines to their truerproportions."

The notion of equity as a means of correcting anomalies in the delimitationof the continental shelf boundaries is reinforced by the Court's assertionthat "[i]t is therefore not a question of totally refashioning geographywhatever the facts of the situation but, given a geographical situation ofquasi-equality as between a number of States, of abating the effects ofan incidental special feature from which an unjustifiable difference oftreatment could result. "9

The ICJ's judgment of the North Sea Continental Shelf cases, however,is not in harmony with the perception of proportionality which ProfessorJ.P.A. Francois quoted in his Memorandum on the Regime of the HighSeas91 for the International Law Commission. Professor Francois sug-gested that the extent "des eaux juridictionelles'" of each state be pro-portionate to population density, the extent of the national territory, andthe length of its coastline. 92 Indeed, this thesis of proportionality, like theargument of the Federal Republic of Germany claiming that each stateshould receive "a just and equitable share" of the area to be apportionedamongst them, would appear to follow a different path from that troddenby the Court.

More recently the ICJ, in the Continental Shelf (Tunisia/Libyan ArabJamahiriya) case 93 referred to its analysis of proportionality in the NorthSea Continental Shelf cases:

88. 1969 LC.J. 3, at 49-50.89. 1969 I.C.J. 3, at 52.90. 1969 I.C.J. 3, at 50.91. U.N. Doc. AICN. 4/32, [1950] 2 Y. B. INT'L L. COMM'N 67 (1950).92. Id. at 110-11, citing Azcarraga, Los Derechos Sobre la Platiforma Submarina, 2 REVISTA

ESPANOLA DE DERECHO INTERNACINALE 47 (1949).93. Continental Shelf (Tunisia/Libyan Arab Jamahiriya) case, 1982 I.C.J. 4.

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It should be reaffirmed that the continental shelf, in the legal sense,does not include the sea-bed areas below territorial and internalwaters; but the question is not one of definition but proportionalityas a function of equity. . . .Furthermore, the element of propor-tionality is related to lengths of the coasts of the States concerned,not to straight baselines drawn round those coasts. The questionraised by Tunisia: "how could the equitable character of a delimi-tation of the continental shelf be determined by reference to the degreeof proportionality between areas which are not the subject of thatdelimitation?" is beside the point; since it is a question of propor-tionality, the only absolute requirement of equity is that one shouldcompare like with like.'

POSSIBLE ALTERNATIVE REGIMES

Selected pronouncements of the International Court of Justice and itspredecessor, the Permanent Court of International Justice, have beenreviewed to extract from them evidence of an unfolding equity juris-prudence enriching public international law and the decisional process ofinternational tribunals in general. A number of vital doctrines have beenidentified. In the present section these doctrines provide the criteria foridentifying appropriate managerial regimes established, or advocated, forthe purpose of equitably utilizing and distributing the benefits of theresources contained in common geological structures which lie athwartthe boundaries separating the continental shelves of two or more states.The proposed regimes are not concerned with establishing boundaries byreference to equitable principles, as was called for in the North SeaContinental Shelf cases,95 but are more concerned with the management,exploitation, and distribution of resources to be found in common geo-logical structures.96 The suggested model of the "managerial or admin-istrative conciliation regime" 97 and the proposal for a multinational publicenterprise9" have some analogies to offer to the development of a commonregime for exploring or exploiting the mineral resources of commoncontinental shelf resources. These possible regimes are discussed in thelight of: (1) goals; (2) areas; (3) participants; and (4) measures.

94. 1982 I.C.J. 18, 76 (emphasis added).95. North Sea Continental Shelf cases, 1969 I.C.J. 3.96. Analogies for such common regimes may be provided by fisheries agreements. For example,

the type of fisheries regime denominated the "agent state" regime may fruitfully provide valuableanalogies for framing regimes for working common mineral deposits. See Goldie, The Oceans'Resources and International Law-Possible Developments in Regional Fisheries Management, 8COLuM. J. TRANSNAT'L L. 1, 44-45 (1969).

97. Id. at 45-46.98. Id. at 46-51.

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GoalsIn the North Sea Continental Shelf cases," Judge Padillo Nervo, in an

independent concurring opinion, formulated the purpose of the continentalshelf doctrine and convention:

The purpose of the continental shelf doctrine and of the Conventionis to contribute to a world order, in the foreseeable rush for oil andmineral resources, to avoid dangerous confrontation among Statesand to protect smaller nations from the pressure of force, economicor political, from greater or stronger States."°

If a regime's main function is merely the settlement of boundaries,this formulation of purpose may suffice. Distributive managerial regimes,however, should be guided by more affirmative goals which include: (1)improvement of techniques to optimize world welfare and the rewardswhich the continental shelf mining industry may offer to states partici-pating in it; (2) facilitation of participating states' domestic policies,whether the policies are the creation of employment opportunities or theexpectation that the deep-ocean mining activities will contribute to thosestate's economies either by earning foreign currency or by preventingimportation of such necessary items as oil and gas; (3) assurance thatequities arising from reliance, notice (including estoppel and laches),proportionality, and unjust enrichment are adequately provided for; and(4) generation of an economic value in the right to mine or drill in thecommon continental shelf areas lying between two or more states madesubject to the regime by limiting access thereto. This economic valuecould be recovered for the regime in the form of license fees, royalties,or taxes. Such resources could be applied on behalf of the mining regimeas a whole to defray such costs as research, administration, and control.Surpluses should also be available for general purposes both within andwithout if the participating states agree.

Controlling access to a given deposit could be the strategy best suitedfor realizing these additional affirmative goals, in most cases. Controllingaccess to a particular deposit calls for the joint action of all states par-ticipating in the regime to delegate, to a common regulatory authorityand for the benefit of all, a part of each one's separate authority and, inparticular, the pre-existing right of each to act preemptively. As the wholeindustry increases in value, so will the share of each participating state.Such a share could exceed in value what any one state might have pre-viously accrued by unilateral preemptive action at the expense of all theothers. The goals could best be achieved by a functional integration ofthe resource's uses by a supranational agency.

99. North Sea Continental Shelf cases, 1969 I.C.J. 3.100. 1969 I.C.1. 3, 92.

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TRANSBOUNDARY RESOURCE MANAGEMENT,

AreasThe possible areas of regimes which can be offered as alternatives to

one which simply provides the means for carving up state's exclusivesubmarine zones will vary with the choices made by the participatingstates. For shallow submarine areas adjacent to two or more states theregime could optimally include the whole of the region in question; or itcould be limited to the areas of the states prepared to negotiate andconclude a convention for the regulation of the area governed by thatagreement. Finally, the areas brought under a managerial regime mightinclude those where the exploitation of a single geological structure ex-tends across a continental shelf boundary, thereby calling for a singlecommon exploitation activity for purposes of efficiency and conflict avoid-ance.

ParticipantsThe participants of a supranational regional managerial regime regu-

lating the exploration and exploitation of the whole of a continental shelfregion's resources should be limited to the coastal states agreeing toestablish the regime. If the regime is limited to a disputed area or, al-ternatively, to the total shelf region (or portions only thereof), partici-pation in the regime should be limited to those nations. When a managerialregime is established to regulate a single geological structure extendinginto two or more national shelf regions, then its participants should onlyinclude those states in whose submarine areas the structure exists, andwhich also agree to establish the regime. An outside state could be addedby agreement of all the others on the basis of its technological, managerial,capital investment, or other contributions.

MeasuresA managerial regime, irrespective of the area it covers, should ac-

knowledge the importance of technological and economic research. Theyield from continental shelf oil drilling and mining should not only beregulated by engineering criteria but also by considerations which ensurethe optimum uses of the deposit's mineral resources. All forms of dis-crimination, moreover, between enterprises on the basis of nationalityshould be eliminated, provided the enterprise has the support of at leastone of the states participating in the regime.

Alternative RegimesWhile the focus of this article is managerial regimes governing common

continental shelf mineral deposits, arguments and ideas from existing

July 1985]


fisheries regimes,1°1 to the extent they are relevant, are discussed for thepurpose of enriching and inspiring possibilities of acceptable and pro-ductive blueprints for the exploration and use of common mineral re-sources.

Agent StateThe type of fisheries regime which has been denominated "agent state"' 102

has some useful parallels for the development of a regime limiting accessto a common mineral deposit which extends beyond a common continentalshelf boundary.

Fisheries and the 'Agent State" ModelThe Fur Seal Convention between Russia, Japan, the United States,

Great Britain, and Canada"°3 established the leading example of this typeof regime.

[The Fur Seal Convention] is unique among all conservation treatiesin that it appoints two "agents"-the United States and Russia-tocarry out the management and harvesting of the herds on their islands.Pelagic sealing is prohibited, and provision is made for sharing theproceeds amongst the signatories. In effect, the agreement createssole ownership in each of the two areas."o

One or more of the participating states may be accepted as the "fishingagents" of a community of states in a regime. The other members' claimsto participate are then converted into claims for compensation. There isno inherent reason, however, why managerial regimes could not consistof all the states of a region or even of the world, provided they have aresource to contribute or a concrete interest to serve. Some states mightthen choose to trade their claims to a share in the resource for other gainswhich might be collateral to or independent of it. This should be dis-couraged. Accordingly, the principle of abstention," 5 a fisheries concept,could be further developed. Abstention relates to the appointment of, andthe distribution of, vested equitable rewards to the regimes' "agent states."The principle of abstention, moreover, can be used to establish the trade-offs utilized to satisfy claims merely for participation in the regime.

101. See, e.g., Goldie, supra note 97.102. F. CHRISTY & A. SCOTT, THE COMMON WEALTH IN OCEAN FISHERIES 196 (1965).103. The first of these treaties, the Convention Between the United States and Other Powers

Providing for the Preservation and Protection of Fur Seals, was signed July 7, 1911, 37 Stat. 1542.The most recent was signed in 1957 and amended in 1963. See Interim Convention on the Conser-vation of North Pacific Fur Seals, signed Feb. 9, 1957, [1957] 8 U.S.T. 2283, T.I.A.S. No. 3948,314 U.N.T.S. 105, and the Protocol Amending the Interim Convention .... done Oct. 8, 1963,[1964] 15 U.S.T. 316, T.IA.S. No. 5558, 494 U.N.T.S. 303.

104. CHRISTY & Scorr, supra note 102, at 196.105. Goldie, supra note 96, at 28-31, 45.

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The "Essential Unity of a Deposit of Oil and Gas""Measures for protecting oil deposits from wasteful practices,0 7 such

as legislation in the United States,'08 Canada," and the United Kingdom,reflect a policy of unitization."' Unitization is the policy of maintainingthe "essential unity of a deposit of oil and gas."" 2 The United NationsSecretariat has also promoted the policy goal of the "essential unity ofa deposit.""' 3 Support for this policy is also reflected in scholarly writ-ings," 4 and in at least six international agreements." 5 The policy has,

106. For the provenance of this term, and especially for the U.N. Secretariat's use of it early inthe thinking and discussion of the utilization of the resources of a continental shelf region whichare to be found on both sides of an international boundary line, see U.N. Secretariat Memorandumon the Regime of the High Seas 109, U.N. Doc. AICN.4/32 (mimeo July 14, 1959), [1950] 2 Y.B.INT'L L. COMM'N 67, 112 [hereinafter cited as A/CN.4/32]. Since the publication of A/CN.4/32,the term has tended to become as much the accepted term in international law as "unitization" hasbecome for an analogous private law situation in American oil and gas municipal law.

107. Deriving from the application of the "Rule of Capture" to the winning of oil and gas. SeeWestmoreland & Cambridge Natural Gas Co. v. DeWitt, 130 Pa. 235, 18 A. 724 (1889). See alsoWalls v. Midland Carbon Co., 254 U.S. 300 (1920). For a classic statement of the "Rule of Capture"and its correlative offset rule, see Barnard v. Monongahela Natural Gas Co., 216 Pa. 362, 65 A.801 (1907).

108. 30 U.S.C. § 181 (1982), 41 Stat. 437 (1964); 60 Stat. 952, as amended 68 Stat. 583, 584-85 (1954) and 74 Stat. 780 (1960) 30 U.S.C. § 2260) (1964). See also Mineral Leasing Act forAcquired Lands of 1947, 30 U.S.C. §§ 351-59 (1982).

For a history of the development of § 17(b) and its social background, see MYERS, THE LAW OF

POOLING AND UNrrizATION, VOLUNTARY-COMPULSORY 294-97 (1957). The Federal Regulations pur-suant to the Act are the Unit Plan Regulations, 16 Fed. Reg. 77 (1951), 43 C.F.R. 192.20, 192.21(1951).

109. See, e.g., Oil and Gas Conservation Act of 1955, SASK. STAT. c.88 § 35; Oil and GasResources Conservation Act of 1952, REV. ALTA. STAT. c. 46.

110. Great Britain, Petroleum (Production) (Continental Shelf and Territorial Sea) Regulations1964, Schedule 2 (Model Clauses for Production Licenses), cl. 19, Stat. Instr. 1964, No. 708.

111. "Unitization" is the term used in American oil and gas law to reflect the idea of the "essentialunity of a deposit of oil and gas." It is distinct from the idea of "pooling" (which means the "bringingtogether of small tracts sufficient for the granting of a well permit under applicable spacing rules"),6 WILLIAMS & MEYERS, OIL AND GAS LAW § 901, at 2 (1964). "Unitization" means "the joint operationof all or some part of the producing reservoir." Id. at 3.

112. Supra note 106.113. See supra note 106.114. See, e.g., A/CN.4/32, supra note 106, at 109; Lauterpacht, Sovereignty over Submarine

Areas, 27 BRIT. Y.B. INT'L L. 376, 410 n.4 (1950); Mouton, The Continental Shelf, 85 HAGUEACAD. INT'L L. 345, 421-23 (1954-I).

This writer, however, feels compelled to doubt Lauterpacht's statement that "[iut will be notedthat the phenomenon of common pools independent of political boundaries is relied upon in therecitals of the Proclamation of the United States of 1945." There would appear to be no directreference to such a phenomenon in the recital to which Lauterpacht referred. Furthermore, the federalpolicy in these matters, as embodied in § 17(b) of the Mineral Leasing Act, 30 U.S.C. §2260)(1964), was not added to the domestic legislation until the year following President Truman'sContinental Shelf Proclamation in 1945.

For an early international arbitration (in 1909) recognizing the principle of the unity of a resource(crustaceans), see Grisbadarna Case, 13 U.N.R.I.A.A. 147, Hague Ct, Rep. (Scott) 121 (Perm. Ct.Arb. 1911), 4 AM. J. INTL L. 226 (1910) (Perm. Ct. Arb. 1909).

115. See Agreement Between the Government of the United Kingdom of Great Britain andNorthern Ireland and the Government of the Kingdom of the Netherlands Relating to the Explorationof Single Geological Structures Extending Across the Dividing Line on the Continental Shelf underthe North Sea, Netherlands No. I (1965). Cmnd. No. 2830.

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however, been given different interpretations. Thus, for example, AdmiralMouton observed: "We believe that the principle .. .that a dividingboundary-line should not cross an oil pool ...is a guide for countriesin framing their delimitation agreements or for the arbitrator who is calledin in the case of dispute. ' '

16

The first two articles of the United Kingdom-Netherlands Single Struc-ture Agreement'17 provide:

Article 1

If any single geological mineral oil or natural gas structure or fieldextends across the dividing line and the part of such structure or fieldwhich is situated on one side of the dividing line is exploitable,wholly or in part, from the other side of the dividing line, the Con-tracting Parties will seek to reach agreement as to the manner inwhich the structure or field shall be most effectively exploited andthe manner in which the costs and proceeds relating thereto shall beapportioned, after having invited the licensees concerned, if any, tosubmit agreed proposals to this effect.

Article 2

Where a structure or field referred to in Article 1 of this Agreementis such that failure to reach agreement between the Contracting Partieswould prevent maximum ultimate recovery of the deposit or lead tounnecessary competitive drilling, then any question upon which theContracting Parties are unable to agree concerning the manner inwhich the structure or field shall be exploited or concerning the

116. MOUTON, supra note 114, at 422. In the Grisbadama arbitration, the Permanent Court ofArbitration did not recognize that Norway might have an equity remaining in the Grisbadama banks.Such an equity might well have been capable of transformation into a claim for compensation outof a proportion of the Swedish catch. Instead, Sweden was awarded a monopoly of the Grisbadarnalobster fishery, and Norway was given a monopoly of the lobster fishery of the Skjottegrunde. Supranote 114. Additionally, Admiral Mouton has said:

The arbitrators held that the boundary line ought to be traced: "so that it would passmidway between the Grisbadarna banks on the one side and Skjottegrunde on theother." The arbitrators did not want to cut through a bank, which is in fact also anapplication of the same principle of leaving intact the unity of a deposit, this timenot of minerals but of marine resources. A demarcation, so the award continues,which would assign the Grisbadarna to Sweden is supported by the circumstancesthat "lobster fishing in the shoals of Grisbadarna had been carried on for a muchlonger time, to a much larger extent, and by a much larger number of fishermen bythe subjects of Sweden than by the subjects of Norway." ... On the other hand itwas averred that "the Norwegian fishermen have almost always participated in thelobster fishing on the Skjottegrunde in a comparatively more effective manner thanat the Grisbadarna," which warranted a demarcation assigning the Skjottegrunde toNorway.

MOUTON, supra note 114, at 422.117. See Agreement Between the Government of the United Kingdom of Great Britain and

Northern Ireland and the Government of the Kingdom of the Netherlands Relating to the Explorationof Single Geological Structures Extending Across the Dividing Line on the Continental Shelf underthe North Sea, Netherlands No. 1 (1965), Cmnd. No. 2830.

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manner in which the costs and proceeds relating thereto shall beapportioned, shall, at the request of either Contracting Party, bereferred to a single Arbitrator to be jointly appointed by the Con-tracting Parties. The decision of the Arbitrator shall be binding uponthe Contracting Parties.

Like Admiral Mouton's thesis "never two straws in one glass," 118

these provisions of the single structure Agreement make possible theunified working of a single resource or deposit. Unlike the suggestionthat one state, not necessarily in the fiduciary role of an "agent state,"should alone work a common geological structure, these provisions callfor an equitable apportionment of the costs and proceeds. The equitiesunderlying such an apportionment could be measured by reference eitherto the proportion which each state's share of the common deposit bearsto the whole, or to their technological, managerial, or monetary contri-bution. Setting aside the instrumental equities, the relative needs of eachstate could bring about distributive justice by using the resource's ca-pacity, if equitably managed, to ameliorize the per capita wealth of eachadjacent nation. Once the choice of equitable values is settled, one statecould become the "agent state" of all the others, and distribute burdensand benefits according to the measured or agreed upon norms or standardsof apportionment. On the other hand, a common supranational managerialagency controlling the resource and distributing its benefits would provideat least the appearance of the greater objectivity and, hence, of greaterfunctional equity.

Another interesting variation on the idea of the unitized working of amineral deposit without establishing an international managerial regimeis provided by the 1939 agreement between the Netherlands and theGerman Reich." 9 This regime provided for the most economic miningof a common coal deposit on either side of the two countries' frontiers.Each country, independently of the surface boundaries, followed its ownvein of the mineral. 20 The boundary between the two countries on thesurface was not applied in the coal galleries. There was neither any

118. MOUTON, supra note 114, at 421.119. See Treaty Between the German Reich and the Kingdom of the Netherlands for the Deter-

mination of the Working Boundary of the Coal Mines Situated on Both Sides of the Frontier Alongthe River Worm, May 17, 1939, [1939] Staatsblad van het Kononkrijk der Nederlanden No. 30,199 L.N.T.S. 251. One method contemplated as a possible outcome of the negotiations was theunified working of a single resource or deposit with an apportionment, among the parties, of thecosts and proceeds. To work the deposit in a unified way as the agent state that state would, ineffect, have to be given a usufructory right over the resources on the other side of the boundarycoupled with an obligation to account and to act, generally, in a fiduciary manner. For a fullerindication of this "agent state" model see Goldie, The North Sea Continental Shelf Cases-A Rayof Hope for the International Court? [hereinafter cited as Goldie, Ray of Hope], 16 N.Y.L. FORUM

327, 370 (1970), and Goldie, supra note 96, at 44, 45.120. See Treaty Between Germany and letherlands, supra note 119.

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recognition of an obligation to compensate the state in whose territory adeposit was to be worked in any given case, nor any concept of a com-munity of interest which might best be made manifest in a common andfiduciary regime governed by such equitable principles as reliance andproportionality. Presumably, the mutual equities of the states would cancelone another as both states intended to cross each other's boundaries asthe exigencies of mining and the presence of seams demanded. This lastvariation, however, although of interest, is clearly not suitable for therational working of an oil or gas deposit.

Continuing ConciliationDisputes between states attempting to exercise legal rights to a resource

often cause both a rise in international tensions and a loss of opportunitiesfor developing that resource. A purely legal dispute tends to focus attentionupon the analysis of the validity of the exclusive and contending claimsput forward, rather than upon the resource's potential for development.In contrast to the barrenness of purely legal disputes, the flexible pro-cedures offered by managerial regimes to disputants include the possibilityof developing a resource and of reallocating the increased productivityor value. Surely such values, and even the procedures through whichthey are expressed, are available for negotiators and draftsmen of regimeswhich govern the development of a single geological structure commonto the legal continental shelves of two or more states.

The value of such flexible procedures is illustrated in the resolution ofsterile legal confrontations between India and Pakistan by the settlementwhich the "good offices"'' of the International Bank for Reconstructionand Development achieved in the dispute between those two countriesover the waters of the Indus River.'22 By raising extensive credits, andby working with engineers and administrators whose focus of interestcentered far more upon the development of the resource than upon disputesabout legal rights to its value at the current level, the factual basis of thedispute was changed, with salutary results.'23 The bank, through its pow-

121. The late Professor Baxter has pointed out that:While the International Bank for Reconstruction and development referred to itsrole as one of "good offices" its function actually went beyond "good offices" or"mediation" in the technical senses of these terms. As the real differences werebrought to light, the Bank was forced to play a more active part in working out asolution. The Bank pursued its own enquiries into the facts, and it was the Bankwhich at various stages suggested principles upon which the agreements might bebased-a process which might be describes as "continuing conciliation."

Baxter, The Indus Basin, in THE LAW OF INTERNATIONAL DRAINAGE BASINs 443, 477 (Garretson,Hayton & Olmstead eds. 1967).

122. Id.123. Baxter, supra note 121, at 476, has written:

Instead of there being a limited and insufficient quantity of water to quarrel over,

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erful negotiating position, was able to insist on what was, in effect, asupranational administrative organ making transnational allocations interms of the equities for which it was able to obtain agreement.

As a practical matter one cannot assume that funds of the magnitudeof those raised by the bank for the Indus Valley project would be availableto develop a common submarine geological structure stretching acrossthe continental shelves of a plurality of adjacent and/or opposite states.Such financial power as the bank brought to bear in the interest of amicablesettlement would not, in most cases at least, be at the disposal of thecommissions established to engage in supranational administrative activ-ity unless the participating states overcame their usual reluctance to re-linquish their ultimate power to define their goals, policies, and values.There is, however, one basis for optimism: even if the lack of financialpower were to deprive the supranational managerial agency of a coerciveauthority, common sense inducements which stem from expectations ofbenefits from an optimally developed resource might well provide theadministrative body with an authority which the parties could voluntarilyconcede as a matter of enlightened self-interest.

Despite its utility to the settlement of the Indus River dispute, and evento the resolution of conflicting claims in international river systems ingeneral, the blueprint of continuing conciliation may not be completelyapposite for the problems of exploiting transnational common submarinemineral deposits. These regimes cannot entertain the goal of achievingany final distribution of rights over their resources similar to the goal offinal settlement of disputed rights to the waters of an international riversystem. Accordingly, the term "administrative conciliation" is suggestedto indicate the function of an agency empowered to regulate the devel-opment and exploitation of a mineral stock common to a number of states.The agency would be empowered to balance disparate equities advancedby diverse claimants, maintain economic returns on investment in theresource and its utilization, and engage in scientific and conservationactivities. A managerial regime dedicated to the administrative concili-

the supply of water would be increased to a level that would permit the needs ofboth parties to be satisfied. The slate was wiped clean of the existing rights andobligations of the parties, whatever they might be considered to have been.

He concluded his analysis of the dispute over the waters of the Indus River and of the InternationalBank of Reconstruction and Development's "continuing conciliation" with the following observation:

The possibility of adjusting the dispute is enhanced if the mediator or conciliator isauthorized not merely to divide the existing water supplies but to work out a schemefor the wider and more effective use of the water resources within the basin. Theargument that both parties can secure more water from the basin through cooperativeeffort offers, if not a guarantee of success, at least some inducement for the partiesto work together.

Id. at 478.

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ation of two or more coastal states' continental shelf 124 would not onlyachieve a far better utilization of the present resource than such partitionarrangements as those envisaged under Article 6 of the Continental ShelfConvention, but also it would lead to the cultivation and enhancementof the value of mining industry in question, to the great benefit and generalwelfare of all the states concerned. Finally, a managerial regime couldachieve more equitable distribution of rights to exploit the resource byimproved means than would a regime legally bound within the scope ofexisting know-how and technology.

Administrative ConciliationAlthough it would necessarily involve a continuing conciliation ap-

proach, administrative conciliation, as a proposed means of investingcompetence in a supranational managerial agency endowed with the mis-sion of developing a resource lying across the common geological struc-ture in the common continental shelves of two or more adjacent or oppositestates, would involve a number of important differences.

An administrative conciliation regime would not look to any finalsettlement of claims. Rather, it would seek to provide a framework forresolving differences by continually redistributing the satisfactions. Infact, market fluctuations and technology changes call for continuing reap-praisal of the basic criteria of the resources distribution among the coun-tries involved. Administrative or managerial conciliation does not indicatea process of widening the area of agreement by building on previouslysettled aspects of a dispute. Instead, its purpose is to indicate the con-tinuous management of the development, distribution, and redistributionof the resources to accommodate continuously changing controlling fac-tors. To carry out its tasks effectively, a conciliation commission wouldhave to operate without any goal of achieving final solutions. It would,

124. The amounts committed by the contributing states to the Indus Basin Development Fundby December 31, 1968, (in U.S. Dollar equivalents as determined by the International Bank forReconstruction and Development for accounting purposes at that date) were as follows:

Australia $ 26,061,000.Canada 36,246,361.Germany 51,600,000.IBRD Loan & IDA Credit 138,540,000.India 168,803,200.Pakistan in L sterling 1,188,000.

in rupees 371,824,292.United Kingdom 91,288,270.United States dollar grant 295,590,000.

dollar loan 121,220,000.rupees 235,000,000.

$1,537,361,123.

Letter from Piero Sella, Esq., Assistant General Counsel, IBRD, to the author (Jan. 28, 1969).

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in fact, become a permanent administrative body regulating the regionto enhance the local transnational continental mining industry's efficiencyand value, and to achieve a just distribution of its products. If such acommission were invested with supranational powers, the transnationalindustry which would emerge, and all those who depend upon it, wouldbe better served. The commission would be able to administer the industryas a single unit without having to respect the special claims of sovereignstates through which it would otherwise have to operate.

Multinational Public Enterprises'25

Multinational public enterprises are currently employed for many di-verse purposes and in many different areas of international economicactivity, each established and justified by pragmatic and functional cri-teria. They are brought into being when the states creating them seek toattain common ends, "by making use of the present social and scientificopportunities to link together particular activities and interests, one at atime, according to need and acceptability, giving each a joint authorityand policy limited to that activity alone." 26

Secondly, although they are called upon to fulfill very divergent tasks,these entities "possess certain common characteristics which distinguishthem from other international organizations. They perform economic tasksof a public nature, for which they require the long-term investment ofcapital and a permanent organization. They generally perform operationalfunctions, and are vested with a power of direct action."' 27 Multinationalpublic enterprises are, therefore, "clothed with the power of government,but [are] possessed of the flexibility and initiative of private enterprise. "'28

Adequately designed, a multinational public enterprise could effec-tively combine the advantages of the "agent state"' 29 solution with thoseof administrative conciliation. Such an enterprise could either engagedirectly in continental shelf mining as a multinational enterprise or, al-ternatively, license mining corporations to ensure compliance with thestandards set by the enterprise for equipment safety, employment policies,

125. For the choice of this term, from among a number of possibilities, see FLIGLER, MULTI-NATIONAL PUBLIC ENTERPRISES 7-8 (IBRD Study 1967).

126. Mitrany, The Prospect of Integration: Federal or Functional, 4 COMMON MKT. STUDIES 119,135 (1965). See also MrrRANY, A WORKING PEACE SYSTEM 41 (1966).

127. FLIGLER, supra note 125, at 7.128. Friedmann, International Public Corporations, 6 MODERN L. REV. 185, 186 (1943), quoting

President Roosevelt's characterization of the Tennessee Valley Authority. For a discussion of themore detailed aspects of a blueprint for a multinational public corporation to regulate a regionalfishery, see Goldie, supra note 96, at 47-51.

129. For a discussion of the concept, in the context of fisheries management, of the "agent state,"see CHRISTY & Scorr, supra note 102, at 196; Goldie, supra note 96, at 44-45. For a discussion ofthis concept in terms of both fisheries and minerals, see Goldie, Ray of Hope, supra note 119, at327, 370-74 (1970).

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and economic efficiency. In either case, the enterprise would have to beaccorded either administrative control or a monopoly of the industry. Itwould enjoy the advantages of the agent state, as it would be the delegateto all states participating in the regime. The public enterprise approachwould, in addition, avert the disadvantage of the agent state since nostate, or group of states, would be favored. The public enterprise, more-over, would provide the advantage of the administrative conciliation pro-cedure, since its blueprints should include an equitably-oriented commissionwith authority to give overall directions to the corporation in light of thevalues, demands, expectations, and contributions of the participating states.Such a public intergovernmental corporation would have a further ad-vantage, one which multinational public enterprises have in common,namely that of building transnational habits of cooperation and of prob-lem-solving. These transnational attitudes and habits expand to becomecoterminous with the area and mandate of the regime rather than that ofany participating state. 3°

The charter of an intergovernmental organization established for thepurpose of managing a multinational regional mineral deposit shouldinclude provisions governing the entity's juridical personality (and na-tionality, if any), structure and control powers, privileges and immunities,and the available procedures for the settlement of disputes. These variousconsiderations will be very briefly surveyed.' 3'

Constituent InstrumentThe enterprise should be created by a treaty setting forth the main

outline of its structure, the political organ to which it is answerable, itspurposes, the basic guidelines of its policies, the framework of its intendedaction, its obligations towards its member states and theirs towards it.The statutes, articles of association, and powers to promulgate bylawsshould also be established by international agreement, preferably in theform of a protocol or annex to the constituent treaty. The alternative,namely the creation of the enterprise or, at least, the formulation of its

130. See, e.g., FLIGLER, supra note 125, at 10; CLAUDE, SWORDS INTO PLOUGHSHARES 348 (1964).131. International public enterprises are deservedly becoming an important topic of study for

international lawyers. In addition to the works already cited, the following represent a useful selection:SEWELL, FUNCTIONALISM AND WORLD POLITICS (1966); HANSON, PUBLIC ENTERPRISE AND ECONOMIC

DEVELOPMENT (1965); BAXTER, THE LAW OF INTERNATIONAL WATERWAYS 91-148, 306-41 (1965)(but note Baxter's conclusion at 340-41 and his "Articles on the Navigation of International Canals"at 343-45); FRIEDMANN, THE CHANGING STRUCTURE OF INTERNATIONAL LAW 216-20 (1964); FINER,THE T.V.A., LESSONS FOR INTERNATIONAL APPLICATION (1944); Johnson, International Cooperationin Satellite Communications Systems, 61 PROC. AM. Soc. INT'L L. 24 (1967); Note, CorporationsFormed Pursuant to Treaty, 76 HARV. L. REV. 1431 (1963); Sereni, International Economic Insti-tutions and the Municipal Law of States, 96 RECUEIL DES COURS 133 (1959-I); Parry, The InternationalPublic Corporation, THE PUBLIC CORPORATION: A COMPARATIVE SYMPOSIUM 495 (Friedmann ed.1954); and see Friedman, A Comparative Analysis, Id. 541, 593-94 (Friedmann ed. 1954).

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articles of association under the laws of a member state, might tend togive that state a fulcrum to lever an undue advantage. Accordingly, theformat of an intergovernmental enterprise incorporated under the domesticlaws of one of the member states should be avoided.

Juridical Personality or NationalityJuridical personality has been accorded to multinational public enter-

prises by conferring on them the nationality of one of the member states. 3'Whatever the merits of such a conferral may be in general, it would notbe appropriate for the enterprise proposed here, since the state whosenationality had been conferred might well be placed in a position to obtainfavorable treatment vis-d-vis the enterprise, and the distribution of itsbenefits. Accordingly, the constituent treaty should be drafted to conferinternational legal personality on the enterprise. Since the enterprise wouldnot be universal, or even general, this conferral might not be acceptedas coming entirely within the scope of the decision of the ICJ in theInjuries case.133 On the other hand, if the international personality estab-lished in the treaty is necessary for the tasks the enterprise is structuredto perform, then an objective juridical personality should be consideredas having been created over and above that merely established by themember states adherence and recognition alone. This thesis has an im-portant practical significance. In order to establish its credit for the purposeof entering into contractual relationships with public or private entitiesin third countries, the enterprise must establish its legal capacity to enterinto binding engagements. This depends not only upon the competenceaccorded to the enterprise in its constituent instrument and upon its jur-idical status under international law, but also upon the laws of the thirdcountries in which it wishes to engage in business transactions.

Structure and ControlThe enterprise could be organized either as a licensing and supervisory

authority, a producers' cooperative, or an independent public entrepre-neurial entity. In any case, it should be required to permit miners fromthe member states to participate, without discrimination, in its activities,whether as licensees or as employees. Distinct from the cooperative,entrepreneurial, or licensing and supervisory structure of the enterprise,a council or governing board made up of representatives of the memberstates should be established with authority to exercise general overall

132. Parry, supra note 131.133. Advisory Opinion on Reparations for Injuries Suffered in the Service of the United Nations,

1949 I.C.J. 174, 185. See also Advisory Opinion on Certain Expenses of the United Nations 1962I.C.J. 151.

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supervision, but not day-to-day management. This entity would be chargedwith the task of insuring the public accountability of the enterprise andof providing a forum for the release, or at least debate, of politicalpressures which would remain. The governing board or council wouldalso insure that the enterprise's general direction would remain responsiveto those represented interests dependent on the exploration of the resourcesbrought under the regime but which have no direct participation in it, forexample, consumers and exporters. Strictly business decisions, on theother hand, should remain the function of the Board of Directors. TheBoard of Directors, which should be seen as an executive body at theapex of the enterprise, would reach decisions on the distribution of mininglicenses or on the quantity of the mineral to be mined from the perspectiveof the requirements of an orderly market and of the optional exploitationof the resource. The Board of Directors should also balance the distri-bution of the surplus return, designated "the economic rent of the re-source,' 34 with other significant values and interests germane to theindustry and pressing for recognition.

PowersThe constituent instruments should, clearly, grant all necessary and

proper powers to the enterprise ito enable it to perform its functionsadequately. These should include the power to engage in business un-dertakings and agreements of all ,kinds; buy, own, and sell land and allother forms of property; accept gifts; ,sue and be sued; compound claims;and perform all conditions necessary to the fulfillment of its purposes.The enterprise should also be empowered to negotiate and conclude agree-ments with member states and third states as a subject of public inter-national law. States should also be answerable to the enterprise for breachesof agreements, wrongs apart from agreements, and injuries to it and itsemployees under international law. The enterprise should, finally, beindependently answerable for wrongs as a distinct bearer of internationalrights and duties. '35 The contracting states should be bound to take allaction necessary to facilitate the enterprise's operations and to give ad-equate priorities to it in their respective economic development plans.Finally, the constituent agreements should explicitly state that all impliedpowers necessary for the enterprise's adequate fulfillment of its functionsand purposes should be imputed to it.

134. For a discussion of this criterion, in terms of the economic uses and management of fisheries,see Goldie, supra note 96, at 21-23.

135. For similar suggestions, but with respect to the liability of international organizations engagedin activities in outer space, see FAWCETT, INTERNATIONAL LAW AND THE USES OF OUTER SPACE 45-47 (1968).

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Privileges and ImmunitiesThe operational needs of the enterprise should dictate the scope of its

privileges and immunities. On the one hand, if the enterprise had noprivileges and immunities, it could be vulnerable to undue pressure ofits host state (or states) and become little better than an instrument of its(or their) policy.' 36 On the other hand, if its privileges and immunitieswere to exceed its functions, the enterprise might become a refuge forprivilege and incompetence. The proper scope of the enterprise's privi-leges and immunities is what is necessary for the impartial, efficient, andeconomical discharge of the functions of the organization. '37 In particular,the tax status of the enterprise, as distinct from that of its members, maycreate problems of independence. The enterprise should be accordedimmunity from all forms of taxes on its assets and revenues, as well ason its acts, operations, services, and transactions.

Settlement of DisputesThe constituent agreements should contain special provisions for the

friendly settlement of disputes by conciliatory means in the governingbody. Failing this, procedures for the peaceful settlement of disputes,perhaps analogous to those in Article 33 of the Charter of the UnitedNations,' 38 should be provided. Finally, and as a matter of last resort, thetreaty should provide for the establishment of a judicial tribunal withcompulsory jurisdiction. Refusal to accept this jurisdiction, or to-complywith the tribunal's judgment, should be enforced by expulsion from theregime or by such lesser enforcement measures as the governing boardmay determine. Ultimately, however, the peaceful settlement of disputesarising out of the efficient management of the regime's resources, thejust participation in its activities and decisions, or the equitable distri-bution of its benefits, should be predicated on the self-interest of thedisputants. The regime should be so conducted that each member statecould readily perceive that a greater advantage enured to it by remaininga participating member state of the regime than by "going it alone." Sucha perception should result from a freely determined and enlightened self-interest rather than coercion, intimidation, or victimization.

CONCLUSION

International judicial settlement, arbitration, and customary forms ofconciliation, in their search for the single conclusive resolution of issues

136: For an example acknowledging the importance of this consideration, see Broadbent v.Organization of American States, 628 F.2d 27 (D.C. Cir. 1980). See also Brief for the United Nationsas Amicus Curiae, Broadbent v. O.A.S., 628 F.2d 27 (D.C. Cir. 1980).

137. Broadbent, 628 F.2d 27.138. U.N. Charter art. 33.

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created by an adversarial posture of the parties, have traditionally lookedto legal criteria for their modes of decision. This article has proposed amanagerial basis for transboundary resource development in which dis-putes would be progressively conciliated rather than the adjudication ofopposing claims. Equitable developments, standards, and values leadingto the individualization of justice, provide the managerial regime with itsmodalities and materials of decision. Such a regime, directed to achievingequities as managerial goals, would have many advantages over the strictvalues commonly argued in confrontational situations and modes. Suchan equitably grounded regime could, for example, increase the efficiencyof the resource's production, thus reducing the cost of mining per mea-sured amount. The regime could improve the engineering and managerialmeans of exploitation, thereby increasing the fund to be distributed be-tween various developmental purposes of the region, and provide forfurther improvements of the uses of the continental shelf itself. The regimewould, furthermore, be directed towards effectuating a distributive justicein allocating the benefits derived from the resource's economic exploi-tation. To enable the managerial regime to work efficiently, it would benecessary for participating states to waive whatever legal claims theymight assert in a more traditional arena. Appropriately persuasive argu-ments, in terms of enlightened self-interest and impartial justice, couldconvince participating states to effectively waive their sovereign rights.

Five forms of international resource management have been consideredrelevant to international equitable principles: national quotas; agent states;continuing conciliation; administrative conciliation; and multinational en-terprises. The models of administrative and managerial conciliation havebeen discussed in variable terms, namely: a commission to continuouslyregulate the conduct of a common continental shelf mining industry witha view to increased efficiency and economic returns. Finally, the regimeof a multinational public enterprise has been offered to manage a givencommon resource or industry, either by means of a system of licenses orby establishing a common intergovernmental public entrepreneur actingon behalf of the participating states. The most beneficial regulation anddevelopment of a regional mining industry would best be served by onemonopolistic multinational public enterprise. Between the two types ofintergovernmental public agencies discussed in this article, the licensingauthority and the operating enterprise, the enterprise which directly con-ducts the industry and acts as the sole employer and co-operative of themining industry of the participating states is preferred for several reasons.It would be more effectively geared to achieving the goal of fuller man-agerial responsiveness to the equitable needs of the region, because theenterprise would control the industry and not merely function as an in-termediary between the miners and the governing board. Also, the op-

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July 1985] TRANSBOUNDARY RESOURCE MANAGEMENT 699

erating enterprise would have more direct control over mining activitiesthan would the licensing model, enabling it to effectively realize con-servation and distributional welfare goals. The multinational public en-terprise would provide the most effective substitute for the traditionaldichotomy of the international law of the sea between seas subject tocoastal states' exclusive rights and the free high seas open to all. More-over, the multinational operating enterprise could provide models foreffective and equitable regional regimes of participation in, and distri-bution of, the wealth of common continental shelf mining activities.Positive regimes would replace the traditional negative system predicatedon, and justified by, the isolation and divisive contentiousness inherentin a legally severed, but geologically homogeneous and structurally un-ified, continental shelf. Finally, the type of blueprints proposed in theforegoing pages could offer alternatives to the legalistic perspectives whichfocus on contentions about opposing claims and, instead, provide ma-chinery of administrative conciliation and conflict management transcend-ing legalism.

l. f. e. goldie* equity and the international management

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